Cherchez la Verite

One 76-year-old’s search for the truth: 9/11, election fraud, illegal wars, Wall Street criminality, a stolen nuke, the swine-flu scam, control of the U.S. government by global corporations, the unjustified assault on Social Security, media complicity, and the "Great Recession" about to become the second Great Depression. "The most important truths are hidden from us by the powerful few who strive to steal the American dream by keeping We the People in the dark."

By Prof Michel Chossudovsky Global Research, July 29, 2015Global Research 31 July 2014 Original HereThis article was first published by GR on September 9, 2014. In
the context of the July 29, 2015 United Nations Security Council
Resolution vetoed by Russia, it should be emphasized that the evidence
confirms that MH17 was not brought down by a surface to air missile. The West accuses Russia and the Donbass separatists of having brought down the plane with a Buk missile. IT’S A LIE. The evidence available in September 2014 –including a BBC report
which the BBC decided to suppress– refutes the official story. The
alleged role of Russia in bringing down the plane was used as a
justification to implement the economic sanctions regime against
Moscow. Michel Chossudovsky, July 29, 2015 * * *According to the report of German pilot and airlines expert Peter
Haisenko, the MH17 Boeing 777 was not brought down by a missile. What he observed from the available photos were perforations of the cockpit:

This aircraft was not hit by a missile in the central
portion. The destruction is limited to the cockpit area. Now you have to
factor in that this part is constructed of specially reinforced
material

The OSCE Mission

It is worth noting that the initial statements by OSCE observers (July 31) broadly confirm the findings of Peter Haisenko:

Monitors from the Organization for Security and Cooperation in Europe reported that shrapnel-like holes were found in two separate pieces of the fuselage of the ill-fated Malaysia Airlines aircraft that was believed to have been downed by a missile in eastern Ukraine.Michael Bociurkiw of the OSCE group of monitors at his daily briefing described part of the plane’s fuselage dotted with “shrapnel-like, almost machine gun-like holes.” He said the damage was inspected by Malaysian aviation-security officials .(Wall Street Journal, July 31, 2014)

The monitoring OSCE team has not found evidence of a missile fired
from the ground as conveyed by official White House statements. As we
recall, the US ambassador to the UN Samantha Power stated –pointing a
finger at Russia– that the Malaysian MH17 plane was “likely downed by a
surface-to-air missile operated from a separatist-held location”:

The team of international investigators with the Organisation for Security and Cooperation in Europe (OSCE) are uncertain if the missile used was fired from the ground as US military experts have previously suggested, the Wall Street Journal (WSJ) reported. (Malay Mail online, emphasis added)

The initial OSCE findings tend to dispel the claim that a BUK missile system brought down the plane.

Evidently, inasmuch as the perforations are attributable to shelling,
a shelling operation conducted from the ground could not have brought
down an aircraft traveling above 30,000 feet.Ukraine Su-25 military aircraft within proximity of MH17

Peter Haisenko’s study is corroborated by the Russian Ministry of
Defense which pointed to a Ukrainian Su-25 jet in the flight corridor of
the MH17, within proximity of the plane.

Ironically, the presence of a military aircraft is also confirmed by a BBC report conducted at the crash site on July 23.All the eyewitnesses interviewed by the BBC confirmed the
presence of a Ukrainian military aircraft flying within proximity of
Malaysian Airlines MH17 at the time that it was shot down:

Eyewitness #1: There were two explosions
in the air. And this is how it broke apart. And [the fragments] blew
apart like this, to the sides. And when …Eyewitness #2: … And there was another aircraft, a military one, beside it. Everybody saw it.Eyewitness #1: Yes, yes. It was flying under it, because it could be seen. It was proceeding underneath, below the civilian one.Eyewitness #3: There were sounds of an explosion.
But they were in the sky. They came from the sky. Then this plane made a
sharp turn-around like this. It changed its trajectory and headed in
that direction [indicating the direction with her hands].BBC Report below

The original BBC Video Report published by BBC Russian Service on July 23, 2014 has since been removed from the BBC archive. However, it has been found in YouTube:https://youtu.be/C812MrH6TK4

Media Spin

The media has reported that a surface to air missile was indeed fired
and exploded before reaching its target. It was not the missile that
brought down the plane, it was the shrapnel resulting from the missile
explosion (prior to reaching the plane) which punctured the plane and
then led to a loss of pressure.

According to Ukraine’s National security spokesman Andriy Lysenko in a contradictory statement, the MH17 aircraft “suffered massive explosive decompression after being hit by a shrapnel missile.” (See IBT, Australia)

The downed Malaysia Airlines jet in eastern Ukraine suffered an explosive loss of pressure after it was punctured by shrapnel from a missile.

They say the information came from the plane’s flight data recorders, which are being analysed by British experts.

However, it remains unclear who fired a missile, with pro-Russia rebels and Ukraine blaming each other.

Many of the 298 people killed on board flight MH17 were from the Netherlands.

Dutch investigators leading the inquiry into the crash have refused to comment on the Ukrainian claims.

“Machine Gun Like Holes”

The shrapnel marks should be distinguished from the small entry and
exit holes “most likely that of a 30 millimeter caliber projectile”
fired from a military aircraft. These holes could not have been caused
by a missile explosion as hinted by the MSM.

While the MSN is saying that the “shrapnel like holes” can be caused
by a missile (see BBC report above), the OSCE has confirmed the
existence of what it describes as “machine gun like holes”, without however acknowledging that these cannot be caused by a missile.

In this regard, the GSh-302 firing gun operated by an Su-25 is able
to fire 3000 rpm which explains the numerous entry and exit holes.

If we now consider the armament of a typical SU 25 we learn this: It
is equipped with a double-barreled 30-mm gun, type GSh-302 / AO-17A,
equipped with: a 250 round magazine of anti-tank incendiary shells and
splinter-explosive shells (dum-dum), arranged in alternating order. The
cockpit of the MH 017 has evidently been fired at from both sides: the entry and exit holes are found on the same fragment of it’s cockpit segment (op cit)

The accusations directed against Russia including the sanctions regime imposed by Washington are based on a lie.

The evidence does not support the official US narrative to the effect
that the MH17 was shot down by a BUK missile system operated by the DPR
militia.

Ukrainian army general with other officers defects to the Donetsk People’s Republic

This information will probably not be relayed by the official media
because “they demonstrate that Ukraine of Poroshenko is torn from
within."

Former Assistant Minister of Defence of Ukraine, “Major-General”
(equivalent to a general of army corps in France) Aleksandr Kolomiyets,
passed with arms and baggage to the side of the Novorussian resistance.
Arms and baggage, or more accurately with other officers of the
Ukrainian National Army.

“I am Alexander Kolomiyets, a major-general of the Ukrainian armed
forces … My last position was adviser to the Ukrainian defense minister
and senior defense analyst,” he said at the opening of the conference
that he gave to Donetsk. He added: “I will work for the good of the
People’s Republic of Donetsk. “. “Observe who is currently fighting;
only voluntary National Guard." “Soon, there will be unrest in the
army. They do not understand the orders given to them, to kill
civilians. We will see that by fall, everything will change. ”

Together General of the Army corps and officers around him came
provide assistance to the armed forces of the Donetsk People’s Republic.
The general is a leading rookie for the rebellion of Donbass, not only
because he is a very senior officer knows the Kievan enemy within, but
he also knows very well the military of the Donetsk region for having
spent 19 years at the helm. This is also a very damaging loss for the
Kiev junta.

Constant purges within the ranks of Ukrainian armies and security
services, popular demonstrations against the US omnipresence, all this
is beginning to weigh heavily on real Ukrainians who care about their
country and their families.

The general and his friends do not go to the Novorusse side on a
whim. Beforehand, they took care to put their families safe from Kievan
reprisals. According to him, many of his fellow commanders seek to go
over to the separatists, they would be about a hundred:

“The morale of the Ukrainian army is at its lowest, officers and
generals are aware of the criminal nature of political power in place in
Kiev and do not want to fight.”

Before him, the former head of customs at Lugansk, Oleg Tchermoussov,
had also left his post to join the separatists. Lately Alexei and Yuri
Miroshnichenko brothers attached to the Ukrainian Embassy in Paris
(attached to the Foreign Intelligence of Ukraine), had joined the
separatists because of their disagreement with the Kiev policy. And
these are two more recruits of choice, from the heart of the enemy
system, to strengthen the cause of the New Russia.

The two brothers decided to leave work in Paris and return home in
Lugansk. They claim to be in total disagreement with the policies of the
regime in Kiev. They joined with their own means Lugansk where they
gave a press conference to explain the reasons for their actions:

“My brother and I have seen what was going on in Ukraine, the coming
to power of some people. We decided to leave and who have nowhere to go
we decided to come back home in Lugansk […] We have not been forced by
anyone, we have made this decision voluntarily. We could reasonably
continue to work for the regime that is in place in Ukraine. These are
just traitors, fascists and agents in the pay of other nations, they
lead the country to ruin. “.

We must be courageous in this climate of purges and reprisals in Kiev
to protest against the Americans who invested the government with three
key ministers:https://youtu.be/Y05zqTfYo4k

This was done a few days ago the Ukrainians in Kiev. We hear very clearly protesters shout: “US go home! ”

This does not prevent the US-oligarch Kiev regime massaging equipment
and men on the front line of contact as shown by the map below, which
takes stock of the positioning of troops this morning June 24, 2015. The
troops of Kiev are in blue:

However soldiers are certainly not thrilled to have to face their former compatriots. They have in mind the aisles of graves of fighters that extend and multiply in cemeteries.

In recent hours, the front line has remained stable but the shelling continued on Donetsk, Gorlovka, Marinka and Shirokino particular. The intensity of the fighting northwest of Lugansk also increases.

The war in Ukraine is not yet complete, the system set up by the Americans is likely to collapse. That’s probably what they see coming as they do get wet too. The promised military equipment is still waiting, and Canadian trainers. But no doubt that the US authorities do not care about destroying a country, as long as they have wreaked havoc by dividing a little more of Europe, an amount of Europeans of Russia against Europeans of the Union. And we have not seen everything yet, they will not stop in such a bad way, because they are destabilizing the Balkans.

Whether True Or A Parody The Night Watchman Has A Valid Story
And An Entertaining One

THE NIGHT WATCHMAN

Once upon a time the government had a vast scrap yard in the middle of a desert.
Congress said, “Someone may steal from it at night.”
So they created a night watchman position and hired a person for the job.
Then Congress said, “How does the watchman do his job without instruction?”
So they created a planning department and hired two people, one person
to write the instructions, and one person to do time studies.
Then Congress said, “How will we know the night watchman is doing the tasks correctly?”
So they created a Quality Control department and hired two people. One was to do the studies and one was to write the reports.
Then Congress said, “How are these people going to get paid?”
So they created two positions: a time keeper and a payroll officer then hired two people.
Then Congress said, “Who will be accountable for all of these people?”
So they created an administrative section and hired three people, an
Administrative Officer, Assistant Administrative Officer, and a Legal
Secretary.
Then Congress said, “We have had this command in operation for one year and we are $918,000 over budget, we must cut back.”
So they laid-off the night watchman.

NOW slowly, let it sink in.
Quietly, we go like sheep to slaughter. Does anybody remember the
reason given for the establishment of the DEPARTMENT OF ENERGY during
the Carter administration?
Anybody?

No?
Didn’t think so!
Bottom line is, we’ve spent several hundred billion dollars in support
of an agency, the reason for which very few people who read this can
remember!
Ready?
It was very simple… and at the time, everybody thought it very appropriate.

The Department of Energy was instituted on 8/04/1977, TO LESSEN OUR DEPENDENCE ON FOREIGN OIL.

AND NOW IT’S 2015 — 38 YEARS LATER — AND THE BUDGET FOR THIS
“NECESSARY” DEPARTMENT IS AT $24.2 BILLION A YEAR. IT HAS 16,000
FEDERAL EMPLOYEES AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES; AND LOOK
AT THE JOB IT HAS DONE!

Greece: Sound and Fury Signifying Much

Paul Craig Roberts

All of Europe, and insouciant Americans and Canadians as well, are
put on notice by Syriza’s surrender to the agents of the One Percent.
The message from the collapse of Syriza is that the social welfare
system throughout the West will be dismantled.

The Greek prime minister Alexis Tsipras has agreed to the One
Percent’s looting of the Greek people of the advances in social welfare
that the Greeks achieved in the post-World War II 20th century. Pensions
and health care for the elderly are on the way out. The One Percent
needs the money.

The protected Greek islands, ports, water companies, airports, the
entire panoply of national patrimony, is to be sold to the One Percent.
At bargain prices, of course, but the subsequent water bills will not
be bargains.

This is the third round of austerity imposed on Greece, austerity
that has required the complicity of the Greeks’ own governments. The
austerity agreements serve as a cover for the looting of the Greek
people literally of everything. is one member of the Troika
that is imposing the austerity, despite the fact that the IMF’s
economists have said that the austerity measures have proven to be a
mistake. The Greek economy has been driven down by the austerity.
Therefore, Greece’s indebtedness has increased as a burden. Each round
of austerity makes the debt less payable.

But when the One Percent is looting, facts are of no interest. The
austerity, that is the looting, has gone forward despite the fact that
the IMF’s economists cannot justify it.

Greek democracy has proven itself to be impotent. The looting is
going forward despite the vote one week ago by the Greek people
rejecting it. So what we observe in Alexis Tsipras is an elected prime
minister representing not the Greek people but the One Percent.

The One Percent’s sigh of relief has been heard around the world.
The last European leftist party, or what passes as leftist, has been
brought to heel, just like Britain’s Labour Party, the French Socialist
Party, and all the rest.

Without an ideology to sustain it, the European left is dead, just as
is the Democratic Party in the US. With the death of these political
parties, the people no longer have any voice. A government in which the
people have no voice is not a democracy. We can see this clearly in
Greece. One week after the Greek people express themselves decisively
in a referendum, their government ignores them and accommodates the One
Percent.

The American Democratic Party died with jobs offshoring, which
destroyed the party’s financial base in the manufacturing unions. The
European left died with the Soviet Union.

The Soviet Union was a symbol that there existed a socialist
alternative to capitalism. The Soviet collapse and “the end of history”
deprived the left of an economic program and left the left-wing, at
least in America, with “social issues” such as abortion, homosexual
marriage, gender equality, and racism, which undermined the left-wing’s
traditional support with the working class. Class warfare disappeared
in the warfare between heterosexuals and homosexuals, blacks and whites,
men and women.

Today with the Western peoples facing re-enserfment and with the
world facing nuclear war as a result of the American neoconservatives’
claim to be History’s chosen people entitled to world hegemony, the
American left is busy hating the Confederate battle flag.

The collapse of Europe’s last left-wing party, Syrzia, means that
unless more determined parties arise in Portugal, Spain, and Italy, the
baton passes to the right-wing parties—-to Nigel Farage’s UK
Independence Party, to Marine Le Pen’s National Front in France, and to
other right-wing parties who stand for nationalism against national
extermination in EU membership.

Syriza could not succeed once it failed to nationalize the Greek
banks in response to the EU’s determination to make them fail. The
Greek One Percent have the banks and the media, and the Greek military
shows no sign of standing with the people. What we see here is the
impossibility of peaceful change, as Karl Marx and Lenin explained.

Revolutions and fundamental reforms are frustrated or overturned by
the One Percent who are left alive. Marx, frustrated by the defeat of
the Revolutions of 1848 and instructed by his materialist conception of
history, concluded, as did Lenin, Mao, and Pol Pot, that leaving the
members of the old order alive meant counter-revolution and the return
of the people to serfdom. In Latin America every reformist government is
vulnerable to overthrow by US economic interests acting in conjunction
with the Spanish elites. We see this process underway today in
Venezuela and Ecuador.

Duly instructed, Lenin and Mao eliminated the old order. The class
holocaust was many times greater than anything the Jews experienced in
the Nazi racial holocaust. But there is no memorial to it.

To this day Westerners do not understand why Pol Pot emptied
Cambodia’s urban areas. The West dismisses Pol Pot as a psychopath and
mass murderer, a psychiatric case, but Pol Pot was simply acting on the
supposition that if he permitted representatives of the old order to
remain his revolution would be overthrown. To use a legal concept
enshrined by the George W. Bush regime, Pol Pot pre-empted
counter-revolution by striking in advance of the act and eliminating the
class inclined to counter-revolution.

The English conservative Edmund Burke said that the path of progress
was reform, not revolution. The English elite, although they dragged
their heels, accepted reform in place of revolution, thus vindicating
Burke. But today with the left so totally defeated, the One Percent
does not have to agree to reforms. Compliance with their power is the
only alternative.

Greece is only the beginning. Greeks driven out of their country by
the collapsed economy, demise of the social welfare system, and
extraordinary rate of unemployment will take their poverty to other EU
countries. Members of the EU are not bound by national boundaries and
can freely emigrate. Closing down the support system in Greece will
drive Greeks into the support systems of other EU countries, which will
be closed down in turn by the One Percent’s privatizations.

Pentagon Concludes America Not Safe Unless It Conquers The World

Paul Craig Roberts

The Pentagon has released its “National Military Strategy of the United States of America 2015,” June 2015. http://news.usni.org/2015/07/02/document-2015-u-s-national-military-strategy
The document announces a shift in focus from terrorists to “state
actors” that “are challenging international norms.” It is important to
understand what these words mean. Governments that challenge
international norms are sovereign countries that pursue policies
independently of Washington’s policies. These “revisionist states” are
threats, not because they plan to attack the US, which the Pentagon
admits neither Russia nor China intend, but because they are
independent. In other words, the norm is dependence on Washington.

Be sure to grasp the point: The threat is the existence of sovereign
states, whose independence of action makes them “revisionist states.”
In other words, their independence is out of step with the
neoconservative Uni-power doctrine that declares independence to be the
right of Washington alone. Washington’s History-given hegemony precludes
any other country being independent in its actions.

The Pentagon’s report defines the foremost “revisionist states” as
Russia, China, North Korea, and Iran. The focus is primarily on
Russia. Washington hopes to co-op China, despite the “tension to the
Asia-Pacific region” that China’s defense of its sphere of influence, a
defense “inconsistent with international law” (this from Washington, the
great violator of international law), by turning over what remains of
the American consumer market to China. It is not yet certain that Iran
has escaped the fate that Washington imposed on Iraq, Afghanistan,
Libya, Syria, Somalia, Yemen, Pakistan, Ukraine, and by complicity
Palestine.

The Pentagon report is sufficiently audacious in its hypocrisy, as
all statements from Washington are, to declare that Washington and its
vassals “support the established institutions and processes dedicated to
preventing conflict, respecting sovereignty, and furthering human
rights.” This from the military of a government that has invaded,
bombed, and overthrown 11 governments since the Clinton regime and is
currently working to overthrow governments in Armenia, Kyrgyzstan,
Ecuador, Venezuela, Bolivia, Brazil, and Argentina.

In the Pentagon document, Russia is under fire for not acting “in
accordance with international norms,” which means Russia is not
following Washington’s leadership.

In other words, this is a bullshit report written by neocons in order to foment war with Russia.

Nothing else can be said about the Pentagon report, which justifies
war and more war. Without war and conquests, Americans are not safe.

Washington’s view toward Russia is the same as Cato the Elder’s view
toward Carthage. Cato the Elder finished his every speech on any subject
in the Roman Senate with the statement “Carthage must be destroyed.”

This report tells us that war with Russia is our future unless Russia
agrees to become a vassal state like every country in Europe, and
Canada, Australia, Ukraine, and Japan. Otherwise, the neoconservatives
have decided that it is impossible for Americans to tolerate living with
a country that makes decisions independently of Washington. If
American cannot be The Uni-Power dictating to the world, better that we
are all dead. At least that will show the Russians.

Banks create money when they make loans. Greece could
restore the liquidity desperately needed by its banks and its economy by
nationalizing the banks and issuing digital loans backed by government
guarantees to its ailing businesses. Greece could provide an inspiring
model of sustainable prosperity for the world. But it is being strangled
by a hegemonic power in a financial war that is being waged against us
all.

On July 4, 2015, one day before the national vote on the austerity demands of Greece’s creditors, it was rumored in the Financial Times
that Greek banks were preparing to “bail in” (or confiscate) depositor
funds to replace the liquidity choked off by the European Central Bank.

The response of the Syriza government, to its credit, was “no way.” As reported in Zerohedge, the government was prepared to pursue three “nuclear options” to protect the deposits of the Greek people:

nationalize the banks,

launch a parallel currency in the form of electronic California-style IOUs, and

Syriza sources say the Greek ministry of finance is
examining options to take direct control of the banking system if need
be rather than accept a draconian seizure of depositor savings –
reportedly a ‘bail-in’ above a threshhold of €8,000 – and to prevent any
banks being shut down on the orders of the ECB.Government officials recognize that this would lead to an
unprecedented rift with the EU authorities. But Syriza’s attitude at
this stage is that their only defense against a hegemonic power is to
fight guerrilla warfare.

The Hegemonic Power of the ECB

The Greek crisis is a banking crisis, and it was precipitated largely
by the Mafia-like tactics of the European Central Bank and the
international banks it serves (notably Goldman Sachs). As Jeffrey Sachs observed in the Financial Times in 2012:

The Greek economy is collapsing not mainly from fiscal
austerity or the lack of external competitiveness but from the chronic
lack of working capital. Greece’s small and medium-sized enterprises can
no longer obtain funding. . . . The shutdown of Greece’s banking sector
brings to mind the dramatic shrinkage of bank lending during 1929-33 in
the Great Depression.

A central bank is supposed to protect the financial
stability of solvent banks. But from early February, the ECB cut off
direct financing of Greek banks, instead drip-feeding them expensive
liquidity on special “emergency” terms. This promoted a slow run on the
banks and paralyzed economic activity. When the negotiations broke down,
the ECB capped the assistance, prompting a fast bank run and giving
them an excuse to impose capital controls and effectively shut them
down.

In December 2014, when the Greek Parliament was threatening to reject the pro-austerity presidential candidate, Goldman Sachs warned in a memo:

In the event of a severe Greek government clash with
international lenders, interruption of liquidity provision to Greek
banks by the ECB could potentially even lead to a Cyprus-style prolonged
“bank holiday”.

And that is exactly what happened after the anti-austerity Syriza
Party was elected in January. Why would the ECB have to “interrupt
liquidity provision” just because of a “clash with international
lenders”? As noted by Mark Weisbrot, the move was completely unnecessary.

Events are now spinning out of control. The banks remain
shut. The ECB has maintained its liquidity freeze, and through its
inaction is asphyxiating the banking system.

Factories are shutting down across the country as stocks of raw
materials run out and containers full of vitally-needed imports clog up
Greek ports. Companies cannot pay their suppliers because external
transfers are blocked. Private scrip currencies are starting to appear
as firms retreat to semi-barter outside the banking system.

The Tourniquet of the Central Bank

It is not just Greek banks but all banks that are dependent on
central bank liquidity, because they are all technically insolvent. They
all lend money they don’t have. As the Bank of England recently acknowledged,
banks do not actually lend their deposits. Rather, they create deposits
when they make loans. They do this simply with accounting entries.
There is no real limit to how much money they can create, so long as
they can find creditworthy customers willing to borrow it.

The catch is that the bank still has to balance its books at the end
of the day. If it comes up short, it can borrow from the banks into
which its deposits (whether “real” or newly created) have migrated.
Banks can borrow from each other at very low rates (in the US, the Fed
funds rate is 0.25%). They keep the difference in rates as their profit.

The central bank, which has the power to print money, is the ultimate
backstop in this money-creating scheme. If there is leakage in the
system from cash withdrawals or transfers to foreign banks, the central
bank supplies the liquidity, again at very low bankers’ rates.

That is the way the system should work. But in the Eurozone, the
national central banks of member countries have relinquished their
critical credit power to the European Central Bank. And the ECB, like
the US Federal Reserve, marches to the drums of large international
banks. The central bank can flick the credit switch on or off at its
whim. Any country that resists going along with the creditors’ austerity
program may find that its banks have been cut off from this critical
liquidity, being branded no longer “good credit risks.” That damning
judgment becomes a self-fulfilling prophecy, as is now happening in
Greece.

Turning the Credit Spigots Back On

The problem now for Greece is how to restore bank liquidity without
the help of the ECB. One way would be to leave the Eurozone and return
to its own national currency, as many pundits have urged. Its central
bank could then issue all the drachmas needed to fund the government and
provide cash for the banks.

But that alternative comes with other major downsides, including that the drachma would probably plummet against the euro. Greek leaders have therefore sought to stay in the Eurozone, but that means dealing with the bank runs that are bleeding the banks of euros. It also means bowing to ECB regulation, something the ECB is attempting to impose on all Eurozone banks.

Assuming, however, that Greece stays in the EU, might there be a way
that the government could restore the liquidity necessary to keep its
banks and the economy afloat, without the help of the ECB and while
continuing to use the euro?

Consider again the Bank of England’s bombshell 2014 report called “Money Creation in the Modern Economy.”
According to the BOE, 97% of the money supply is now created by banks
when they make loans. British banks create digital pounds. US banks
create digital dollars. And Greek banks create digital euros.

How it all works is explained by Kumhof and Jakab in an IMF paper called “Banks Are Not Intermediaries of Loanable Funds — And Why This Matters.”
They note that the chief practical limit to the digital creation of
money is simply the willingness of banks to make loans. The central bank
can create massive “excess reserves” (as the Fed did with “quantitative
easing”), but bank lending to local businesses will not increase if the
banks do not see a profit in it. The problem is called “pushing on a
string”: there is no mechanism for forcing banks to make loans.

That is true in a private commercial system, but in a nationalized
system, the government can “pull” on the string. It can manage the
lending of its state-owned banks, as China and Japan have done for
decades. Loans to local businesses can be guaranteed with government
letters of credit in lieu of capital; and if some loans turn out to be
“non-performing,” they can be written off or just carried on the books,
as China has also done for decades. The money was created as accounting
entries and can be carried on the books as accounting entries.

The Greek government could follow China’s lead and nationalize its
private banks, all of which are insolvent. It could then use their
digital money machines to pump liquidity back into the economy, by
making loans to all those once-viable businesses now starved of funds.
Restoring their credit lines would allow them to pay for workers and
materials, generating purchasing power and sales, increasing employment
and the tax base, and generally reversing the economic death spiral
induced by insufficient money in the system to keep the wheels of
production turning.

In an All-digital System, the Books Are Always Balanced.

Balancing the books can easily be achieved in a closed, nationalized,
digital banking system, so long as liquidity can be kept from leaking
out in the form of physical cash withdrawals or transfers to foreign
banks. Money transferred digitally within the system can always be found
somewhere and borrowed back by the bank from which it was transferred,
balancing its books.

The remaining question is, how to deal with leakage in the form of
cash withdrawals or transfers to foreign banks? One radical possibility
would be to go all digital: cash would no longer be official legal
tender after some designated date. President Roosevelt did something
similar when he took the dollar off the gold standard and ordered people
to cash in their gold for paper dollars in 1933.

That approach, however, is highly controversial. Ideally, it could be
avoided by simply paying an attractive digital bonus for depositing
physical cash in the banks, and paying an attractive interest rate to
keep it there. A sizable fee could also be charged for cash withdrawals
or transfers outside Greek banks. This would not actually be a
“haircut,” since the digital euros would be available for use at full
value so long as they were transferred by bankcard or check within the
digital banking system. The transfer penalty could be phased out over
time as cash deposits were built up. In effect, the money would just be
on loan at interest to the banks for several years.

Another much-discussed alternative would be for Greece to leave the
EU and simply issue drachmas. But as of this writing, it looks as if the
creditors have strong-armed Greek leaders into accepting their harsh austerity measures in order to stay in the EU.

Greece blazed the trail globally for political democracy, but
modeling a sustainable economic democracy may have to wait for another
day.____________Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com.

Greece And The EU Situation

Paul Craig Roberts

I doubt that there will be a Greek exit.

The Greek referendum, in which the Greek government’s position easily
prevailed, tells the troika (EU Commission, European Central Bank, IMF,
with of course Washington as the puppet master) that the Greek people
support their government’s position that the years of austerity to which
Greece has been subjected have seriously worsened the debt problem.
The Greek government has been trying to turn the austerity approach into
reforms that would lessen the debt burden via a rise in employment,
GDP, and tax revenues.

The first response of most EU politicians to the Greek referendum
outcome was to bluster about Greece exiting Europe. Washington is not
prepared for this to happen and has told its vassals to give the Greeks a
deal that they can accept that will keep them within the EU.

Washington has a higher interest than the interests of the US
financial interests who purchased discounted sovereign debt with a view
toward profiting from a deal that pays 100 cents on the dollar.
Washington also has higher interest than the interests of the European
One Percent intent on using Greece’s indebtedness to loot the country of
its national assets. Washington’s higher interest is the protection of
the unity of the EU and, thereby, NATO, Washington’s mechanism for
bringing conflict to Russia.

If the inflexible Germans were to have Greece booted from the EU,
Greece’s turn to Russia and financial rescue would put the same idea in
the heads of Italy and Spain and perhaps ultimately France. NATO would
unravel as Southern Europe became members of Russia’s Eurasian trade
bloc, and American power would unravel with NATO.

This is simply unacceptable to Washington.

If reports are correct, Victoria Nuland has already paid a visit to
the Greek prime minister and explained to him that he is neither to
leave the EU or cozy up to the Russians or there will be consequences,
polite language for overthrow or assassination. Indeed, the Greek prime
minister probably knows this without need of a visit.

I conclude that the “Greek debt crisis” is now contained. The IMF
has already adopted the Greek government’s position with the release of
the IMF report that it was a mistake from the beginning to impose
austerity on Greece. Pressured by this report and by Washington, the EU
Commission and European Central Bank will now work with the Greek
government to come up with a plan acceptable to Greece.

This means that Italy, Spain, and Portugal can also expect more lenient treatment.

The losers are the looters who intended to use austerity measures to
force these countries to transfer national assets into private hands. I
am not implying that they are completely deterred, only that the extent
of the plunder has been reduced.

As I have previously written, the Greek “debt crisis” was an
orchestration from the beginning. The European Central Bank is printing
60 billion euros per month, and at any time during the “crisis” the ECB
could have guaranteed the solvency of any remaining creditor banks by
purchasing their holdings of Greek debt, just as the Federal Reserve
purchased the troubled mortgage backed “securities” held by the “banks
too big to fail.” This easy solution was not taken.

The orchestration was a benefit to Western financial interests in
general by enabling enormous speculations on the euro and gambling with
derivative bets on sovereign debt and everything connected to it. Each
successive “crisis,” such as Sunday’s No vote, became cover for an
attack on oil or other commodities. The rigging and manipulation of
markets can be hidden by pointing fingers at the latest “crisis.”

John Perkins in his book, Confessions of an Economic Hit Man,
describes the process by which Western financial interests
intentionally over-lend to weaker countries and then use the pressure of
the debt to force the transfer of the countries’ wealth, and often
sovereignty, to the West. The IMF and its austerity programs have long
played a role in the looting.

In exchange for reducing euro debt on Greece’s books, Greece was to
turn over to private interests its water companies, ports, and protected
islands. Unless the One Percent can purchase the current Greek
government as it purchased previous governments (for example, with
payoffs to borrow money with which to purchase submarines), the
referendum has frustrated the looters.

In my book, The Failure of Laissez Faire Capitalism, I
explained that the Greek “debt crisis” had two other purposes. One was
to get rid of the practice of restructuring a country’s debt by writing
it down to a level the country could afford and to establish in its
place the new principle that people of a country are responsible for the
mistakes of creditors who over-lend. The write-down is no longer to
occur on the balance sheet of the creditors’ but instead becomes a
write-down of pensions, social services, and employment. This, too, is a
process of looting.

The other purpose, as Jean-Claude Trichet, the previous head of the
European Central Bank, made explicitly clear, was to further reduce the
sovereignty of member states of the EU by transferring authority over
fiscal policy (tax and spend decisions) from national governments to the
EU in Brussels.

Washington favors this centralization of political power in Europe,
and Washington favors the One Percent over the people. However, above
all Washington favors its own power and has acted to prevent a Greek
exit, which could begin the unraveling of NATO.

Russia and China have missed an opportunity to begin the unraveling
of NATO by assisting Greece’s departure from the EU. Whatever the cost,
it would be tiny in comparison to the military buildup that Washington
is forcing on both countries. Russia and China might have decided that
Washington could no more accept Greece’s alignment with Russia than
Russia can accept Ukraine becoming a member of NATO.

If the Greek situation and the waiting Italian and Spanish situations
are now resolved along the lines that this article suggests, it means
that the NATO mechanism for Washington’s pressure on Russia remains
intact and that the conflict that Washington has created will continue.
This is the bad news and the downside of Greece’s victory over the
looters.

Costas Lapavitsas is a professor in economics at the University of London School of Oriental and African Studies. He teaches the political economy of finance, and he's a regular columnist for The Guardian.

Europe
dodged a bullet on Sunday. Confounding many predictions, Greek voters
strongly supported their government’s rejection of creditor demands. And
even the most ardent supporters of European union should be breathing a
sigh of relief.

Of
course, that’s not the way the creditors would have you see it. Their
story, echoed by many in the business press, is that the failure of
their attempt to bully Greece into acquiescence was a triumph of
irrationality and irresponsibility over sound technocratic advice.

But
the campaign of bullying — the attempt to terrify Greeks by cutting off
bank financing and threatening general chaos, all with the almost open
goal of pushing the current leftist government out of office — was a
shameful moment in a Europe that claims to believe in democratic
principles. It would have set a terrible precedent if that campaign had
succeeded, even if the creditors were making sense.

What’s
more, they weren’t. The truth is that Europe’s self-styled technocrats
are like medieval doctors who insisted on bleeding their patients — and
when their treatment made the patients sicker, demanded even more
bleeding. A “yes” vote in Greece would have condemned the country to
years more of suffering under policies that haven’t worked and in fact,
given the arithmetic,
can’t work: austerity probably shrinks the economy faster than it
reduces debt, so that all the suffering serves no purpose. The landslide
victory of the “no” side offers at least a chance for an escape from
this trap.

But how can such an escape be managed? Is there any way for Greece to remain in the euro? And is this desirable in any case?

The
most immediate question involves Greek banks. In advance of the
referendum, the European Central Bank cut off their access to additional
funds, helping to precipitate panic and force the government to impose a
bank holiday and capital controls. The central bank now faces an
awkward choice: if it resumes normal financing it will as much as admit
that the previous freeze was political, but if it doesn’t it will
effectively force Greece into introducing a new currency.

Specifically,
if the money doesn’t start flowing from Frankfurt (the headquarters of
the central bank), Greece will have no choice but to start paying wages
and pensions with i.o.u.s, which will de facto be a parallel currency —
and which might soon turn into the new drachma.

Suppose,
on the other hand, that the central bank does resume normal lending,
and the banking crisis eases. That still leaves the question of how to
restore economic growth.

In
the failed negotiations that led up to Sunday’s referendum, the central
sticking point was Greece’s demand for permanent debt relief, to remove
the cloud hanging over its economy. The troika — the institutions
representing creditor interests — refused, even though we now know that
one member of the troika, the International Monetary Fund, had concluded
independently that Greece’s debt cannot be paid. But will they
reconsider now that the attempt to drive the governing leftist coalition
from office has failed?

I have no idea — and in any case there is now a strong argument that Greek exit from the euro is the best of bad options.

Imagine,
for a moment, that Greece had never adopted the euro, that it had
merely fixed the value of the drachma in terms of euros. What would
basic economic analysis say it should do now? The answer,
overwhelmingly, would be that it should devalue — let the drachma’s
value drop, both to encourage exports and to break out of the cycle of
deflation.

Of course, Greece no longer has its own currency, and many analysts used to claim that adopting the euro was an irreversible move
— after all, any hint of euro exit would set off devastating bank runs
and a financial crisis. But at this point that financial crisis has
already happened, so that the biggest costs of euro exit have been paid.
Why, then, not go for the benefits?

Would Greek exit from the euro work as well as Iceland’s highly successful devaluation in 2008-09, or Argentina’s abandonment
of its one-peso-one-dollar policy in 2001-02? Maybe not — but consider
the alternatives. Unless Greece receives really major debt relief, and
possibly even then, leaving the euro offers the only plausible escape
route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean
that the Greeks are bad Europeans. Greece’s debt problem reflected
irresponsible lending as well as irresponsible borrowing, and in any
case the Greeks have paid for their government’s sins many times over.
If they can’t make a go of Europe’s common currency, it’s because that
common currency offers no respite for countries in trouble. The
important thing now is to do whatever it takes to end the bleeding.

About Me

B.S. in Physics, Carnegie-Mellon University, 1960 Ph.D. in Physics, Brown University, 1966. Fellow, American Physical
Society. Fellow, American Association for the Advancement of Science.
Fellow, American Ceramic Society. Member, Geological Society of America, Research Physicist at Naval Research Laboratory (NRL), Washington, DC,
1967-2001. Fulbright-García Robles Fellow at Universidad Nacional
Autónoma de México, 1997. Invited Professor of Research at Universités
de Paris-6 & 7, Lyon-1, et St-Etienne (France) and Tokyo Institute
of Technology, 2000-2004. Adjunct Professor of Materials Science and
Engineering, University of Arizona, 2004-2005. Consultancy: impactGlass
research international, 2005-present.
Winner, one national and two international research awards and honored
by Brown University with a "Distinguished Graduate School Alumnus
Award." Author, 195 papers in peer-reviewed journals and books, Principal Author of 113 of these.